To increase those annual savings, Dzielak said recently the Legislature will have to remove the restrictions on the managed care program.

The Medicaid budget for the current fiscal year is about $800 million in state funds.

State officials constantly are searching for ways to trim the ever-increasing budget for the Division of Medicaid, which provides health care services for about 645,000 elderly, disabled, poor pregnant women and poor children. Officials have viewed managed care – where a health care company is provided a set fee to provide medical services regardless of how costly those services are – as a method to save funds.

But some complain that managed care companies limit access to care for recipients to make money. For that reason the Legislature has been cautious in placing Medicaid recipients in managed care.

“The people Medicaid serves are some of the most vulnerable in the state,” Dzielak said. “They make for some of the most difficult patients to manage.”

During the 2012 session, the Legislature gave the Division of Medicaid authority to place up to 45 percent of its recipients in managed care, but “carved out” certain services from managed care. For instance, hospitals are still reimbursed solely under the “fee for service” model where they are paid for the services rendered.

Dzielak, an appointee of Gov. Phil Bryant, is expected to try to expand managed care during the 2014 session, he told legislators at a recent hearing.

Currently, he said about 22 percent of Medicaid recipients are enrolled in managed care. He said under the current law it is difficult to increase that percentage even though the cap is 45 percent of Medicaid recipients.

The issue, Dzielak said, is that 55 percent of the recipients are children. Under the current law, all children could not be placed in managed care because of the cap.

“We do not want to split the group,” Dzielak said. “This (45 percent cap) is preventing us from putting categories of people in managed care.”

Dzielak argued to legislators that managed care “places some predictability in costs” and also results in better health care outcomes. The managed care companies have an incentive to practice preventive medicine to hold their costs down. He said health care outcomes have improved in several areas for managed care patients.

Rep. Steve Holland, D-Plantersville, a former chair of the House Public Health Committee, said he believes managed care has served a purpose in the Medicaid program. He said the educational component of managed care that helps recipients to learn how to deal with hypertension, for instance, has worked both to curb costs and produce better health outcomes.

But he said he is concerned about managed care companies “cherry-picking” recipients to sign up the most healthy, and thus, least costly.

“I am not saying we need to expand the program,” he said. “I think we are just about at the threshold. I like it right at about 45 percent.”

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